Renting Out Property in Spain

One way of making some money from your holiday property is to rent it out. Most holiday homes are occupied for less than three months a year. Your overseas home is an asset that could generate several hundred pounds a month for you.

If you want to maximise your returns from renting remember that the property must be of the kind that can be easily let out. Things to consider may be that it is close to the sea, reasonably near a major airport and not too isolated from shops, bars and restaurants. Rental returns of around 3% should not be hard to achieve from renting your property to summer visitors in the school holidays.

Renting Property Out on a Mortgage

Mortgage lenders typically will not lend to a property that is going to be let out long term because of the risks involved. Getting rid of unwelcome tenants can be a long drawn out process.

However, most lenders are prepared to take a blind, even benevolent, eye to renting out the property for holiday lets to family, friends or work colleagues. It makes sense to all parties, the more a holiday home is visited, the more secure it is from a security viewpoint. Regular use ensures that the state of upkeep is better. If something goes wrong with the property then the sooner that it is found out and sorted the better. And that's as important for the mortgage lender as it is to the homeowner.

Spainish Income Tax on Property Rentals

Even if nobody else mentions it, you are liable to Spanish income tax on any income you have in Spain arising from rentals. If you are a resident, you should declare your rental income as part of your earnings and you will be taxed at your normal income tax rate. If you are a non-resident, you are subject to tax on income arising in Spain at the flat rate of 25% - although it has to be said that few owners actually seem to declare a great deal of income from their property!